Decoding a Mystery

By Kevin Davies

Nov. 12, 2008 | It is difficult to watch a company with the innovation and imagination of Iceland’s deCODE Genetics struggle to sustain its business given its role at the vanguard of genomic research and medicine. However, last month deCODE retained the Stanford Group to conduct a strategic review of its businesses, which encompass gene discovery, drug development, and molecular diagnostics, in hopes of charting a course to short-term survival and long-term success.

In recent years, but especially since the 2007 boon in identifying gene associations for common diseases, CEO Kari Stefansson and colleagues have contributed more robust discoveries than any other organization, which has spurred the launch of a series of diagnostic kits. But if this decade has taught us anything, it is that translating gene discoveries into drugs is no sure thing. deCODE has managed to push three promising cardiovascular drugs into the clinic, but the most expensive parts of those trials lie ahead. With depleted funds, the current economic mess—Stefansson faults deCODE’s American investments more than his own country’s plight—brings additional problems.

deCODE CEO Kari Stefansson

In a typically candid admission to me shortly before the extent of Iceland’s financial woes became known, Stefansson acknowledged the mounting business pressures facing his company. “You can argue that our company was founded about six years too early, because the technology to systematically isolate disease genes wasn’t available really until a long time [later],” he said.

“We’ve performed very badly in telling out story in the investment community,” he continued. “When you’ve been running a company like this for a considerable number of years before the technology is able to deliver, you end up collecting legacy, you collect debt. We have a convertible bond debt of $225 million, which is basically the cost of running the company…, I’m not happy with it, but am I deeply concerned? No. The sales of our diagnostics are picking up. The company has a very realistic business plan that shows we’re going to become profitable in a very short period of time. The markets and the rest of the world will appreciate it pretty soon.”

Although Stefansson asserted that his company was “leading the field of human genetics,” he said unnamed critics were “trying to undermine our credibility,” for example by “insisting that our diagnostic tests are not measuring any real risk.” The company’s latest test for breast cancer is no exception—few if any of the seven markers in that panel offer a biological rationale for assessing cancer risk. But deCODE insists that its markers are the fruit of replicated studies on some 100,000 women and are capable of identifying several-fold increases in a woman’s cancer.

Bio-IT World’s New Recruit

Alert readers will notice a new byline appearing in this issue. We are delighted to welcome Alissa Poh as the latest member of Bio-IT World’s editorial team. Alissa will be editing PharmaWeek, one of our most avidly read eNewsletters. Alissa hails from Malaysia and studied biochemistry in the U.K. before moving to the U.S., continuing her studies at Dartmouth College and finally the prestigious University of California Santa Cruz science writing program. She has penned some compelling stories around pharma strategy and innovation, two of which are included in this issue (see pages 15, 22). You’ll be seeing her byline much more in these pages and online in the months to come.

Even more alert readers will note that this issue takes us through to the end of 2008. In 2009, we will publish bimonthly issues of Bio-IT World while expanding our ongoing coverage of the bio-IT industry through a range of web and online media. We look forward to seeing you in a prosperous New Year!

November marks the first anniversary of the launch of the personal genomics service deCODEme. Stefansson said his original business proposal “was always to use genetics for preventative health care” (see “Keeping Score of your Sequence,” page 16). Stefansson believes that whole-genome sequencing will replace genotyping within the next 2-5 years. He is proud of a new deCODE method to calculate long haplotypes in the Icelandic genome to aid in the discovery of rare sequence variants. “We need to sequence about 2,000 Icelanders to be able to impute the sequence of the entire nation, because we have the genealogy of thousands of people,” he said.

We’ve had some interesting jousts with Stefansson, who keynoted the 2006 Bio-IT World Expo, over the years. Hopefully, deCODE’s reorganization, scheduled to be announced in November, will do the trick.